Cost of Affordable Care Act can slow growth, startup says

U.S. Sen. Kelly Ayotte, R-N.H.,met with employees of Novocure, which produces a medical device which treats brain cancer, on Wednesday afternoon in Portsmouth to hear how the company has been affected by the Medical Device Tax. (JOHN QUINN/UNION LEADER)

U.S. Sen. Kelly Ayotte, R-N.H., listens to Mike Ambrogi, chief operating officer for Novocure, as he explains how the Portsmouth-based company helps treat brain cancer using a portable device, during a tour of the facility on Commerce Way on Wednesday.
JOHN QUINN

PORTSMOUTH — A startup company that discovered a new way to battle brain cancer hopes federal officials will repeal the Medical Device Tax and allow it to begin pilot studies to expand treatments for other patients.

U.S. Sen. Kelly Ayotte, R-N.H., visited Novocure’s U.S. headquarters at 195 Commerce Way on Wednesday to hear how the federal excise tax is affecting the company, which created a portable device that uses low-level electrical fields to slow or reverse tumor progression for patients with recurrent glioblastoma, or brain cancer.

The device, which was approved by the U.S. Food and Drug Administration in 2011, disrupts the cancer using tumor treating fields, or TTF therapy. It is used to augment existing treatments, such as surgery, chemotherapy or radiation for late-stage patients, according to Mike Ambrogi, chief operating officer.

Ambrogi said it is “one of the weapons in the arsenal against cancer.”

As the NovoTTF-100A system is a medical device, the company paid $580,000 in taxes in 2013 and expects to pay between $1 million and 1.2 million this year, according to Kathy Bachrach, global tax director for the company.

The 2.3 percent excise tax, which was implemented as a revenue source of the Affordable Care last year, taxes revenues rather than profits. That discourages support from investors, said Wilco Groenhuysen, chief financial officer.

“It goes right out of the company without growing the company,” Groenhuysen said, adding that Novocure could use the revenue to pay for five pilot trials to test the technology on other forms of cancer.

Currently, trials are underway in the U.S. and in Europe about how TTF affects cancer in the pancreas, ovaries, lungs and in cases where it spreads from the lungs to the brain.

Ayotte said the possibilities are exciting for the technology but that the challenges of the federal regulations are daunting.

“We want this industry to stay vibrant in this country,” said Ayotte, co-sponsor of a bill to repeal the tax. “When you have a tax like this, it’s passed onto consumers.”